The Power and Electricity Industry

Paper Summary:

This paper reviews the history of the economic structure of the power and electricity industry, which today markets energy at the wholesale and retail level. The paper illustrates the effects of various marketing structures such as pricing strategies, economies of scale, barriers to entry and other such concepts. The author points out that a continuously increasing demand for electricity and efficiency gains stemming from competition and mergers is changing the basic structure of the power industry.

From the Paper:

"In the beginning, these small, privately owned company's represented small individual monopolies. Within a certain geographical area, there was no competition. If the customer wanted power, they paid the price demanded. Every private monopoly was a price maker. There was no substitute product and no competitive pricing scheme. If the customer wanted the product, they had only one place to get it and either paid the price or did without. This type of market structure leads to the companies realizing increasing profit margins."

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